Suppose the local beekeeper owns a large number of bees to produce honey.Assume the marginal cost of each beehive is equal to $250Q, where Q is the number of beehives the beekeeper owns.The marginal benefit of beehives to the beekeeper is equal to $1,500 - $100Q.For every beehive the beekeeper owns, there are some external benefits to local farmers (because bees pollinate crops), equal to $50Q.

1-Which graph best represents this externality problem? Graph 1, Graph 2, or Graph 3?You will use your chosen graph to answer the next few questions.

2-What is the socially efficient number of beehives for the local beekeeper to own?Give your answer to 1 decimal place.Make sure to show the basic steps you took to get your answer.No marks will be given if you give the final answer without showing any work.

3-By referring to the labelled points on your graph (e.g., XY), what is the per unit Pigouvian subsidy amount that would be required to achieve the socially efficient quantity?

4-By referring to the labelled points on your graph, what is the total cost of this subsidy to the government?

5-The Pigouvian subsidy, if implemented, would causes a shift of one of the curves (either PMB or PMC, depending on which graph you chose).What is the equation of the new curve after you impose the Pigouvian subsidy?(E.g, your answer will besomething like PMB = ....)